China South Rail Buys U.K. Robot Maker

Chinese companies have been acquiring foreign businesses to gain intellectual property and access to markets. Following this strategy, a train maker recently bought a British marine robotics manufacturer. Zhuzhou CSR Times Electric Co. plans to buy 100% of shares in Specialist Machine Developments Ltd. (SMD) for £130 million ($193 million), subject to regulatory approval. “CSR not only wants to be a leader of land rail transportation equipment companies, but [it] also wants to do something in the marine engineering equipment field,” said Liu Hualong, president of Changsha-based CSR. Zhuzhou CSR Times Electric is a subsidiary of state-owned China South Rail and said it hopes the acquisition will help it expand beyond high-speed rail into advanced manufacturing and undersea robotics. The company’s five-year plan follows that of China’s “Silk Road Economic Belt” initiative aimed at growing international trade. “Both rail transportation and subsea equipment are strategic high-end industries encouraged by the government,” said Ding Rongjun, chairman of Zhuzhou CSR Times Electric.

SMD builds mining and undersea equipment.

SMD manufactures equipment for deep-sea mining and offshore wind generation, including self-propelled tractors and remotely operated vehicles (ROVs). Andrew Hodgson, CEO of Wallsend, U.K.-based SMD, also said that he hopes to target Asian markets thanks to the purchase. In addition, SMD “will remain independent,” according toThe Northern Echo. “Newcastle will be the headquarters, and we will not cut off the workforce because we want to make sure the margins of SMD go higher,” said Li Donglin, executive director of CSR. CSR Times Electric will keep its deep-water headquarters at SMD, which currently has 350 employees. In return, SMD will set up a subsidiary in China through CSR Times Electric. According to research firm Douglas-Westwood, spending on deep sea robotics is expected to increase by 69% over the next five years, compared with the previous five years, to $210 billion. However, drilling contractors have a backlog because decreasing oil prices have led to a decline in capital expenditures.

More on Undersea Robotics and China

?A lot of people are talking down subsea business and the oil and gas market at the moment, so to be able to do a deal like this when there has been bad news about is brilliant,” said Hodgson. “We do not think the squeezing oil price will have an effect,” said Li. Reuters noted that, as the world’s largest metals consumer, China is also interested in deep-sea mineral extraction.